part 2

2. The short squeeze has started i anticipation of the announcement even the options are very bullish today. Therefore wave 4 up is already active to the upside the only question is the magnitude the very likely levels are either 1180 or 1210 ( most likely) extreme case would be 1240 but a wave 4 is usually not steep but still possible to have this 50% retracement. Vix is supposed to trade back to 35 levels. It will stay very volatile though and 5% swings over the day are set to stay as the problems have not been solved and central banks have almost no bullets left. A test of the 1000 level is mandatory but for now some insiders as usual seem to know whats going to be announced later today.

We are in a week 3 count which is usually not a low point hence I rather look for a more substantial low the next 2 weeks on a lower level as more than just QE3 is needed to calm the markets as European banks have stopped lending to each other as imminent bankruptcy rumors are circulating about SOCGEN and Unicredito. That situation is very fragile and can trigger another crash mode anytime.

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ECB Intervenes In Last Minutes Of Euro Market Trading As Italy Closes Red Once Again

This aggression of a red close in the FTSE MIB will not stand man. Which is why Trichet just went ahead and sent the cavalry to buy another X billion worth of Irish 10 years to send a powerful message that European taxpayer capital will be used to purchase worthless paper that is cash flow bad, until morale improves.